This was an appeal by the taxpayer against a decision of the First-tier Tribunal (FTT) that VAT was due on retained discounts.
The appellant carried on the business of owning and managing hotels and public houses. In the course of that business it negotiated discounts on the purchase price of beer and other products from Brewers. It also negotiated discounts with the Brewers on the price of beer and other drinks supplied to public houses owned or tenanted by other persons (collectively ‘the Publicans’).
The appellant negotiated the discounts each year and paid the Publicans a proportion, but not all, of the sums it received from the Brewers. The issue in this appeal was the appropriate analysis for VAT purposes of the trading relationship between the appellant and the Publicans. The Publicans obtained larger discounts than they would normally due to the volumes purchased by the appellant. The appellant benefited in two
